Chagee Holdings Limited navigated its most challenging year following a period of rapid expansion. In 2025, the company reported net revenue of RMB 12.91 billion, representing a 4% year-on-year increase. Although growth was maintained, the pace decelerated significantly compared to previous years.
Performance in the fourth quarter was particularly difficult, with net revenue declining 10.8% year-on-year to RMB 2.9745 billion. The profit side also faced pressure; due to approximately RMB 320 million in restructuring costs, the quarter recorded an operating loss of RMB 35.5 million.
A consecutive decline in average GMV per store has become a key focus for the market. In the fourth quarter of 2025, the average monthly GMV per store in Greater China fell 25.5% year-on-year to RMB 337,000, while the full-year average stood at RMB 387,000.
External pressures, including intense competition in food delivery, pricing challenges, and a natural correction period after rapid store expansion, all converged in 2025. For Chagee, this manifested as a sharp slowdown in revenue growth, a major shift in store operating models, and a six-month product gap resulting from internal organizational restructuring.
Management acknowledged during the earnings call that it had underestimated changes in the competitive landscape. It clearly defined "operational stability" as the core objective for 2026, with same-store sales growth designated as the primary performance indicator.
Confronted with slowing performance, Chagee has initiated proactive strategic corrections, prioritizing accelerated product innovation and deeper market penetration. In December 2025, the launch of the "Return to Yunnan" product series successfully re-engaged 51% of dormant members, driving a 16.2% sequential increase in GMV and providing initial validation for a product-driven growth strategy.
Entering 2026, the brand has intensified its new product launches, introducing nearly ten new items, including matcha and da hong pao varieties, by March. To improve utilization across different dayparts, Chagee has established dedicated "Morning Series" and "Evening Series" sections. These initiatives use limited-time promotions to cultivate tea-drinking habits at breakfast and leverage low-caffeine products to capture evening consumption. The company also plans to penetrate diverse lifestyle scenarios such as weddings and social gatherings.
Management revealed plans to launch new store formats in 2026, focusing on younger customer segments with multi-category innovations like tea-based specialty drinks and tea lattes. Chagee's business model is subtly becoming more capital-intensive. The company is strategically converting some franchised locations to company-owned stores and accelerating the expansion of its global direct-operated network.
By the end of 2025, the total global store count reached 7,453, a 15.7% year-on-year increase. Notably, the fourth quarter saw a net addition of 248 company-operated stores, bringing the total to 615. Simultaneously, to alleviate franchisee pressure from price competition, the company decided to shift its revenue-sharing model from a traditional raw material cost basis to a GMV-based brand royalty system. This aims to deeply align headquarters' income with actual store performance, stabilizing the franchise network through shared risk.
In the short term, organizational restructuring and the shift in store models have created financial pressures. While full-year 2025 net revenue from company-operated stores grew 126.2%, the sharp increase in their number—from 169 to 615 stores—caused operating costs to surge 130.8% year-on-year, weighing on overall profitability.
For 2026, Chagee has issued a notably restrained strategic outlook. Management explicitly stated it will no longer pursue scale expansion unilaterally. Instead, "operational stability" and "same-store growth" are set as core KPIs, with full-year revenue and profit expected to be roughly flat compared to 2025. The target for new domestic store openings has been scaled back to 300, contingent on prioritizing the health of the existing store base.
Greater expectations are placed on overseas markets. In Q4 2025, overseas GMV grew 84.6% year-on-year, with per-store performance significantly outperforming the domestic market. For 2026, the company plans to add approximately 200 new overseas stores, including an entry into the South Korean market.
For Chagee Holdings, 2026 will be a protracted campaign of operational recovery. The central challenge has shifted from "how many stores can be opened" to "how to make each existing store profitable again."
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